Optimism maintained the greenback under pressure against all major rivals but the JPY. The upbeat sentiment was backed by hopes that US Congress will speed up a stimulus bill now that they acquitted former US President Donald Trump on his second impeachment.
China and the US markets were closed amid local holidays, although the US 10yr treasury yields implied by futures rose another bp to 1.22% - an 11-month high. Australian 3yr government bond yields (futures) traded around 0.19%, while the 10yr yield rose from 1.32% to 1.34% - the highest since March.
Commodities, Brent crude oil futures rose 1.2% to $63.20 – a 13-month high, copper rose 1.0% to an 8-year high, and gold fell 0.3%.
Overnight Currency Ranges
AUD/USD: 0.7768 – 0.7789 (one-month high)
EUR/USD: 1.2121 – 1.2145
GBP/USD: 1.3887 – 1.3919
USD/JPY: 105.06 – 105.41
USD/CAD: 1.2631 – 1.2680
NZD/USD: 0.7218 – 0.7249
AUD/JPY: 81.70 – 82.05
AUD/NZD: 1.0740 – 1.0770 (one-month high)
The RBA’s meeting Minutes released today will shed light on the latest decision to extend its QE program. Thins trading conditions due to the Presidents Day holiday in the US is not allowing AUD to make a decisive move in either direction. Nevertheless, the risk-on market environment, as reflected by the upbeat performances of major global equity indexes, is making it tough for the greenback to find demand yesterday.
AUD is now closing in on strong resistance at 0.7820. It would be surprising if the RBA minutes inspire any major moves today with the performance of regional equity markets and S&P futures more likely to drive direction, although with China remaining closed for New Year celebrations we expect a quieter day ahead.
Support should come first up at 0.7760 with 0.7720 the more important area to watch.
Event Risk Data Today
Australia: The RBA will publish the Minutes of its February Board Meeting. Of interest will be additional colour around the extension of the QE program. Following this, the ABS will release Weekly Payroll Jobs and Wages for the week ending 30 Jan.
NZ: Net migration is set to remain low in December due to border restrictions. Markets expect the bi-monthly GDT dairy auction tonight to result in no change to whole milk powder prices, while futures markets predict a 2% rise.
Euro Area: Markets anticipate that the second measure of Q4 GDP will be little changed from the flash (market f/c -0.7%). The ZEW survey of expectations has remained firm ahead of the February update, despite the immediate economic headwinds facing the Eurozone.
US: The February Fed Empire State Index will be supported by falling case counts in New York (market f/c: 6.0).